SMIC official says Phl needs more FDIs

MANILA, Philippines - The Philippines must attract more foreign and domestic direct investments if it is to take advantage of all the opportunities coming its way, including two international credit rating upgrades.

With investment grade awards, the Philippines can now attract more foreign direct investments (FDIs), which in turn could fuel spending for infrastructure, transportation, power, manufacturing and agriculture.

SM Investments Corp. (SMIC) senior vice president for investor relations Corazon P. Guidote said in a presentation that net FDIs remained below the $1-billion mark in the first quarter of 2013, after registering $2.7 billion last year. That was the best level registered since the $2.2 billion recorded in 2006.

In between those periods, FDIs just managed to average $1.2 billion a year.

In contrast, Indonesia (average $7-billion), Vietnam and Thailand (similar average of $4 to $5 billion) had been consistently siphoning more and more FDIs.

“The Philippines must create a welcoming environment for FDIs, which is predictable and conducive in doing business,” said Guidote. “We must attract and enable the entry of more investments.”

The country must create a strong marketing tool to attract investments while creating a level playing field for both domestic and foreign investors.

But it must create a competitive environment with attractive human and natural resources, infrastructure and technology, and easy-does-it business environment.

“The Philippines should not make investors think twice; the credit rating upgrade is supposed to make them eager to go to the Philippines, as the fundamentals have changed for the better,” said the SMIC official adding that “otherwise, the upgrade becomes useless and wasted. And the Philippines will waste another golden opportunity.”

In the presentation, Guidote pointed out that the country’s average age stood at 23 years, with 62 million or roughly 65 percent of the total population. It is one of the youngest working age population in the region, or a most attractive prospect for domestic and foreign business.

The Philippines is in a good place backed by strong monetary and financial systems, and improved fiscal position. The economy is relatively insulated from the financial turmoil in Western Countries on its strong build up of international reserves from overseas Filipino worker (OFW) remittances and business process outsourcing (BPO) revenues, while debt-to-GDP continued to decline.

Guidote said that the country is awash with opportunities to achieve its potentials by enabling the role of the public sector, bringing direct investments in new sectors to deepen economic growth, increase export capacities, and generate suitable jobs for a young and information technology-oriented population.

The Philippines is consumption driven and the economy has been growing, on average, roughly three to four percent, although it has increased to over six percent on average.

Recently, the first three months of 2013 registered a growth rate of 7.8 percent, which defends the government’s projected full year 2013 growth rate of between six and seven percent.